The world of corporate takeovers has developed some colorful lingo – often literally colorful. We’ll look at some of it this week. Our first example is, like yesterday’s word, a will be a “gold” term.

golden parachute – an employment contract providing that a key executive will be given lucrative severance benefits if the company is taken over

Johnson got the RJR Nabisco board to approve a set of antitakeover provisions … . The board also approved severance arrangements known as “golden parachutes” for each of the company’s top ten officers. Most large U.S. companies have similar pacts, which are often considered part and parcel of antitakeover contingencies. The only thing unusual about RJR Nabisco’s was their size: all told, they were worth $52.5 million.
– Bryan Burrough and John Helyar, Barbarians at the Gate: The Fall of RJR Nabisco

What tactics can a company use to resist an unwanted attempt to take it over? One tactic is to think “eat or be eaten,” and attempt to gobble up the attacker. That strategy is named for a voracious monster.

pac man defense – a stratagem, to prevent a hostile takeover, by which the target company tries to acquire the bidder

. . .But it was the Bendix affair in 1982 that really got people's attention. The head of Bendix, William Agee, launched a bid for Martin Marietta. Martin Marietta launched a "Pac Man defense" and made a hostile bid for Bendix. Then Bendix ended up being acquired by Allied Corp.
. . .In the course of this, Agee bailed and took an expensive parachute with him. It was, at that point, the most expensive golden parachute ever: $4 million.
– Business Week, How Golden Parachutes Unfurled,, Dec. 12, 2005

To stagger is to astound or overwhelm, as with shock. But when a company’s board of directors is “staggered”, it isn't in shock; it is using a tactic to remain in control.

staggered board – a board (of directors) whose members’ terms are overlapping, not coincident, so that only some directors (not all) are elected in any single election

[C]orporate governance rating agencies penalize companies that do not elect all of the directors each year. [S]taggered boards block takeovers. If the target has a staggered board, a bidder must win two proxy contests, conducted more than a year apart, to gain control of the board. No bidder in the modern era of takeovers has had the patience and persistence to do this.
– New York Times, Feb. 14, 2007 (ellipses omitted)

Another “color”ful term, combining green with blackmail.

greenmail – the practice of buying enough stock to threaten a hostile takeover, so that the company will pay you a premium price to buy the stock back and get you to go away (also, the money paid to you)

. . .You remember greenmail. [B}oards often bought out the stakes of investors who were threatening a takeover fight just to get rid of them. The buyout would be at a premium to the market price, allowing the investors enrich their pockets … regular shareholders didn't get the same deal.
. . .Texaco paid in 1984 to fend off a takeover, while General Motors bought out Ross Perot's stake in 1986. The investors each reaped more than $100 million in profits.
. . .But thanks to tightened board rules, a post-Sarbanes Oxley pro-shareholder sentiment, and in several cases, state laws outlawing greenmail, raiders now have to build a broad shareholder consensus to get their goals accomplished.
– Forbes, Feb. 21, 2006 (ellipses omitted)

Although the dictionaries don’t note it, the term is also being used for a corporation's “go-away” payments beyond the takeover context.

It's not every day that a major corporation offers to pay $10 million in greenmail to encourage prompt settlement of a federal investigation.
– eWeek, May 27, 2004

Richman shrugged. “If you have a strong case, take him to trial.” “Yes,” Casey said. ”But trials are very expensive, and the publicity doesn’t do us any good. It’s cheaper to settle, and just add the cost of his greenmail to the price of our aircraft."
– Michael Crichton, Airframe

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poison pill – an arrangement that an attempted takeover will trigger certain events – the events being ones that make the takeover less attractive. (The arrangement is made as an anti-takeover tactic.) E.g., issuance of preferred stock that is redeemable at a premium in the event of takeover.

The recent Microsoft/Yahoo confrontation provides an example.

Yahoo, the internet company that rejected a $44.6 billion bid from Microsoft, may find that a so-called poison pill in its bylaws isn't enough to defend against a hostile takeover. The provision is designed to increase the number of shares outstanding in the event of an unwanted offer, making a takeover costly.
– Yahoo’s poison pill may fail to repel Microsoft, Feb. 13, 2008

A colorful term to end this theme.

white knight – a friendly acquirer, sought out by a target firm to rescue it from an unwelcome acquirer

Is Alcan in search of a white knight? The Canadian aluminum producer has opened its books to mega miners Rio Tinto and BHP Billiton, in an attempt to fend off a $27 billion offer from American rival Alcoa
– Forbes, June 20, 2007
[Note: Alcan was Alcoa’s Canadian subsidiary until 1951, when regulators forced a separation. As of 2007 the two were the largest aluminum producers.]